Credit card industry and personal debt statistics (2005 and prior)

By Ben Woolsey

• There were 691 million general purpose credit cards in circulation in the U.S. in 2005 (Source: Visa USA, MasterCard Int’l, American Express, Discover Card)
• The top 10 credit card issuers controlled 86% of the general card purpose credit card market share in 2005, up from 55% ten years earlier. (Source: FDIC)
• The credit card industry mailed over 6 billion credit card offers in 2005, an average of 6 offers per household per month (Source: Synovate/Mail Monitor)
• Average direct mail response rates for credit card banks decreased to an all time low of .28% in 2005, down from 0.4% in 2004 and 0.6% in 2003 (Source: Synovate/Mail Monitor)
• The credit card industry took in $43 billion in fee income from late payment, over-limit and balance transfer fees in 2004, up from $39 billion in 2003 (Source: Government Accountability Office)
• 45% of banks surveyed employed universal default provisions in their card member agreements (Source: ConsumerAction.org survey)

American consumers

• The number of U.S households receiving a credit card offer each month increased to 71% in 2004, up from 69% in 2003 (Source: Synovate)
• The average length of time in credit card debt was 43 months for low and middle income Americans (Source: Demos and Center for Responsible Lending)
• 70% of low and middle income Americans report using their credit cards as a safety net – relying on cards to pay for car repairs, basic living expenses, medical expenses or household repairs (Source: Demos and Center for Responsible Lending 2004 Nat’l survey)
• The average savings rate in the U.S. was a negative 1% in 2005, the lowest level since the great depression (Source: Federal Reserve)
• Total American consumer debt reached $2.3 trillion in 2005 (Source: Federal Reserve)
• Total American consumer debt first reached $1 trillion in 1994 (Source: Federal Reserve)
• Total revolving debt reached $827 billion in 2005 (Source: Federal Reserve)
• Total American household consumer debt averaged $11,840 in 2005 (Source: Government Accountability Office)
• Total American consumer debt increased 41% between 1998 and 2004 (Source: Government Accountability Office)
• The average (not median) American household had $7,782 in revolving debt in 2005 (Source: Government Accountability Office)
• Average household credit card debt has increased 167% between 1990 and 2004 (Source: Government Accountability Office)
• Revolving debt has increased 31% between 1999 and 2004 (Source: Government Accountability Office)
• The average interest rate paid on credit cards was approximately 12.51% in 2005 (Source: Federal Reserve)
• The rate of personal savings in the United States dipped below 0% for the first time since the great depression in 2005, hitting negative .5% (Source: FDIC)
• Over 60% of Americans revolved a balance on their credit cards in 2005 (Source: Federal Reserve)
• Approximately 51 million households carried consumer debt in 2005 (Source: US Senate Banking Committee)
• The percentage of people only making minimum payments at any given point in time varied between 7% and 40% between 1999 and 2005 (Source: GAO study)
• Approximately 96% of Americans will have to retire financially dependent on the government, family or charity (Source: US Dept of Health and Human Services)
• As of 2004, 76% of Americans had at least one credit card (Source: Federal Reserve)
• 1.6 million Americans filed for bankruptcy in 2005 (Source: Federal Reserve Bank of Philadelphia)
• The average credit card balance in 2005 ($7,782) would require over 117 months to pay off if only making minimum payments of 4% at an average interest rate of 14% (Source: CreditCards.com calculator)
• 5% of Americans used a credit card to make their tax payment in 2004 (Federal Reserve)
• Among middle class households, the average amount of credit card debt paid off with home equity loans was $12,000 (Q3 2005) (Source: US Senate Banking Committee)
• According to a national survey, the most significant predictor of financial stress is if households rely on using credit cards to cover nondiscretionary living expenses like rent, groceries and medical expenses (Source: Demos and Center for Responsible Lending)

Students

• In 2004, the average college student graduated with $16,500 in student loans, up 74% since 1997 (Source: Nellie Mae)
• Regarding college students credit card usage:
> 43% of freshman owned a credit card, compared with 74% for 4th and 5th year students.
> 41% of cardholders carried a balance from month to month, and the median amount was $1,000.
> 25% of cardholders used their credit card to pay for tuition.
(SOURCE: American Council On Education, www.acenet.com, “Credit Card Ownership and Behavior Among Traditional-Age Undergraduates, 2003-2004)

Seniors (Source: Employee Benefits Research Institute)

• Elderly debt levels rising—Families near or in retirement are getting more in debt:
• The percentage of American families with heads age 55 or older that had debt increased from 1992–2004, reaching 61 percent, almost 5 percentage points higher than in 2001
• The average total debt level also rose, from $29,309 in 1992 to $51,791 in 2004. The median debt level (half above, half below) of those with debt rose from $14,498 to $32,000. This represented a real increase in average and median debt levels of about 77 and 121 percent, respectively, from 1992. Oldest elderly incurred sharply higher debt—Families with a head age 75 or older with debt increased substantially in 2004, to 40.3 percent from 29.0 percent in 2001. The increase in the 75 or older group accounted for most of the overall increase in incidence of debt among families with a head age 55 or older
• The average debt with a family head age 75 or older rose to $20,234 in 2004 from $7,769 in 1992, up 160 percent
• The median debt (half above, half below) rose to $14,800 in 2004 from $4,218 in 1992, up more than 250 percent
• Debt growing fastest among the poor—Debt increases with a family’s income, although debt is growing fastest among lower-income families. In 2004, 47 percent of families in the lowest income quartile were in debt, compared with 75 percent of those in the top income quartile. Families in the lowest income quartiles had the largest percentage point increases in debt from 2001 to 2004 (from 38 percent to 47 percent)

Identity Theft (Source: 2003 Federal Trade Commission Survey)

• Approximately 4.6% of national survey respondents (statistically equating to 9.91 million Americans) reported some type of unauthorized use of their personal information for fraudulent charges or fraudulent establishment of credit in their names
• 67% of identity theft victims said they have had an existing credit card account misused
• No out-of-pocket expenses were incurred by 67 percent of those who discovered the misuse of their personal information within 5 months of the time the misuse began. Where it took 6 months or more to discover the misuse, only 40 percent of victims incurred no out-of-pocket expenses
• Most victims of ID Theft do not report the crime to criminal authorities. Only about 25 percent of victims who participated in the survey said that they had reported the crime to local police. Even with the more serious “New Accounts and Other Frauds” form of ID Theft, only 43 percent of victims said that they had reported their experiences to local police
• Only 22 percent of ID Theft victims said that they had notified one or more credit bureaus about their experiences. Even among those who suffered from the “New Accounts & Other Frauds” type of ID Theft, only 37 percent contacted a credit bureau. Of those victims who contacted credit bureaus, 62 percent asked to have a “fraud alert” placed on their credit reports
• Theft, including a lost or stolen wallet or pocket book or the theft of a victim’s mail, was the most commonly mentioned way of obtaining the victim’s personal information. Approximately 25 percent of ID Theft victims reported that their information was obtained through such theft
• Approximately 50% of ID Theft victims were unaware of how their personal information was obtained
• 13% of all victims say their information was obtained during a transaction – by taking information from a credit card receipt or during a purchase, or through purchases made over the Internet, mail, or phone. Those who experienced theft of existing credit card accounts only were most likely to mention transactions as the source of information for the thief (17%)
• 14% of all victims said the thief used “other” means to obtain their information. This includes people who said that their personal information was misused by someone who had access to it such as a family member or a workplace associate. Others indicated that the thief had obtained their personal information from printed checks or bills or that they had given the information to someone who then used it for another purpose.

Published: September 13, 2007

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